Reed Brodsky, of the government, asked the judge's permission to
interrupt the testimony of Rajiv Goel for two witnesses who could not be
in New York next week. It's an unusual move, but the judge and
the defense both accepted it.

So, after an hour or so of Goel testimony, it was time.

"The government calls its next witness, Lloyd C. Blankfein," a
voice boomed over the courtroom -- and we turned, and there he
was, standing meekly in front of the big wooden doors.

Blankfein was wearing a blue tie, a white shirt and a dark suit.
He became more relaxed as the questioning wore on, and even
bantered with Raj's defense attorney, John Dowd throughout the
cross. (In fact, after a break in giving testimony, Blankfein
walked over to the defense team, and shook Dowd's hand, then
Raj's).

During his testimony, we gleaned some insight into how Blankfein
runs his ship: he gets Profit and Loss statements at the end of
every business day, via email and voicemail. He admits he rarely
reads the email, and garners the necessary information from the
latter.

He also talks regularly with his board members in a one-on-one
context, often "offline" he said. This gives the director
opportunities to talk with Blankfein and raise concerns outside
of the hearing of other board members. He had such conversations
with Rajat Gupta.

Besides those subjects, a primary focus of Lloyd's testimony was
the July 2008 recording of Gupta and Raj discussing the
possibility of Goldman's acquisition of a commercial bank
-- Wachovia -- or an insurance company --
AIG.

Blankfein Bails Out The Government

Federal prosecutors, even before today, have labored over the
Gupta-Raj AIG-Wachovia call. It is, for the prosecutors, another
occasion in which they say Raj Rajaratnam blatantly traded on
material, non-public information.

Today, it was the defense's turn to labor over that telephone
call, and the 2008 board meeting from which it allegedly stemmed.

John Dowd showed the court a copy of board meeting minutes from
June 2008. The meeting had taken place in St. Petersburg, in
Russia.

"Can you find the reference to possibility of buying a commercial
bank or insurance company?" Dowd asked Blankfein.

Lloyd looked at the pile of paper he had been handed. "It's a
10-page, single spaced…" he said.

"Take your time," Dowd said.

We waited. Blankfein turned the pages. It felt like this it was
about to be a watershed moment for the defense, with the validity
of the government's argument that Gupta leaked information based
on that particular board meeting, about to be called
into question by a particularly memorable witness. After several
minutes passed, Blankfein made a sound into his microphone.

Dowd asked if the Goldman CEO found a reference. We sat on the
edge of our uncomfortable, wooden courtroom seats. Based on what
we had been shown of the minutes previously, we were doubtful a
reference could be found.

And then, in an ironic turn of events, it was Lloyd Blankfein's
turn to save the government: "On Page 8..."

Dowd almost seemed taken aback. Where, he asked?

"O'Neill asked to lead a strategy review…" Blankfein said.

The words Wachovia or AIG, or even the phrases "insurance
company" or "commercial bank," did not appear on that document.
We knew that; so did Dowd. But Blankfein, in pointing out that
one, seemingly vague sentence, saved government prosecutors from
serious injury by the defense.

When it came time for the government to redirect, federal
prosecutor Andrew Michaelson asked Blankfein about the so-called
strategy review. The Goldman chief explained that in strategic
review, the bank will address potential paths for the firm (for
example, its game-plan in certain growth markets; increases in
asset management) and other strategy-based topics, and "certainly
any potential merger and acquisitions… Whether it would be good
strategy to merge or buy into a commercial bank."

"Speculation is people trying to guess," Blankfein told jurors at
one point. In a board meeting, however, those board members "know
what the company is going to do."

This has been a refrain of the government since the trial
began.

Blankfein Talks Board Meetings

Blankfein confirmed that information about Goldman, of which
Rajat Gupta was made aware during board meetings, was
confidential. He also confirmed that Gupta was prohibited from
relaying that information to a third party.

Prosecutors played the recording of Gupta and Raj discussing the
potential acquisitions, and asked Blankfein whether Gupta had
violated the bank’s confidentiality policy in revealing
information spoken about at the board meeting.

"Um. Yes," Blankfein said.

The defense argues that their client was able to trade on Goldman
stock based on news that was circulating in the media, regulatory
events such as TARP and public regulatory filings.

During the cross-examination, Terence Lyman honed in on whether
board members could talk about information that was already
public, outside of board meetings, if it had been discussed in a
board meeting.

Though the topics about which directors talk during any given
board meeting might already be public, Blankfein said, board
member reactions to those public events, are not. As such, they
are confidential, and should not be relayed to non-board members.

"The fact that things are discussed in a board meeting is
confidential," Blankfein said. "The reaction of board members is
confidential. Even to a public topic, because it emanates from
the board."